Monthly Archives: April 2014

Navy Petty Officer Based in Japan Charged in International Bribery Scandal

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A fourth U.S. Navy official has been charged in a complaint unsealed today with accepting cash, luxury travel and consumer electronics from a foreign defense contractor in exchange for classified and internal U.S. Navy information.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement.
Petty Officer First Class Dan Layug, 27, who enlisted in the Navy in September 2006, was arrested on April 16, 2014, in San Diego by special agents with NCIS and Defense Criminal Investigative Service.   Layug made his initial appearance today in federal court before U.S. Magistrate Judge Karen S. Crawford in the Southern District of California.
According to the complaint, Layug received bribes in return for sending sensitive U.S. Navy information to employees of Glenn Defense Marine Asia (GDMA), a defense contractor.   GDMA CEO Leonard Glenn Francis, 49, of Malaysia, had previously been charged with conspiring to bribe U.S. Navy officials, and GDMA executive Alex Wisidagama, 40, of Singapore, pleaded guilty on March 18, 2014, to defrauding the U.S. Navy.   Two other senior Navy officials – Commander Michael Vannak Khem Misiewicz, 46, and Commander Jose Luis Sanchez, 41 – have been charged separately with bribery conspiracies involving Francis and have pleaded not guilty.   On Dec. 17, 2013, Naval Criminal Investigative Service (NCIS) Supervisory Special Agent John Bertrand Beliveau II, 44, pleaded guilty to bribery charges for regularly tipping off Francis to the status of the government’s investigation into GDMA.
According to the complaint, Layug worked secretly on behalf of GDMA by providing classified ship schedules and other sensitive U.S. Navy information in exchange for cash, travel expenses, and consumer electronics.   Court records allege that Layug used his position as a logistics specialist at a U.S. Navy facility in Yokosuka, Japan, to gain access to U.S. Navy ship schedules – some of which were classified – and other internal information, and provided this information to GDMA’s vice president of global operations.   In exchange, court records allege, GDMA provided Layug with regular payments, some of which were delivered in envelopes of cash.   The complaint alleges that on May 21, 2012, the vice president of global operations instructed a GDMA accountant that “at the end of each month, we will be providing an allowance to Mr. Dan Layug.   Total of US $1000.   You may pay him the equivalent in Yen.   He will come by the office at the end of each month to see you.”
Court records allege that, in addition to his monthly “allowance,” Layug sought consumer electronics from GDMA.   In an email on March 9, 2012, Layug asked the vice president of global operations “what are the chances of getting the new Ipad 3 [sic]?   Please let me know.”   In another email exchange on May 28, 2013, Layug asked the vice president of global operations for a “bucket list” of items including a high end camera, an iPhone5 cellular phone, a Samsung S4 cellular phone, and an iPad Mini.   Shortly after sending his “bucket list” to the vice president of global operations, Layug stated in an email that “the camera is awesome bro!   Thanks a lot!   Been a while since I had a new gadget!”
In addition to consumer electronics, GDMA allegedly provided Layug and his friends with rooms at luxury hotels throughout Asia.
According to court documents, Layug allegedly undertook steps to conceal his bribery relationship with GDMA by, among other things, describing classified ship schedules using the code word “golf schedules” and opening a bank account in the name of his infant daughter into which he deposited portions of his “allowance.”
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.
The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Attorney Brian Young of the Criminal Division’s Fraud Section, and Trial Attorney Wade Weems, on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.
The charges contained in the criminal complaint are merely allegations, and the defendant is presumed to be not guilty unless and until proven guilty.
Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline , or call (800) 424-9098.

GEORGIA REAL ESTATE INVESTOR PLEADS GUILTY TO BID RIGGING AND FRAUD AT PUBLIC FORECLOSURE AUCTIONS

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(Brad Geyer: “This is a Georgia housing auction case that is the first instance I have seen where a former Atlanta Field Office legacy case makes reference to the Washington Criminal II Section in a press release.  This is further indication that the Antitrust Division has completed its reorganization and is now approaching full integration.  Achieving full integration is important for agency productivity because it ushers in a greater mix and quantity of investigations and prosecutions.  Attorneys needed to complete their moves between duty stations, new attorneys take time to find mentors and build confidence, and everyone gets established in their new settings with new combinations of stakeholders and managers.  As I have said previously, with strong White House emphasis means housing auction fraud will continue to be an Antitrust Division enforcement priority.  This also means the FBI is fully engaged and this focus is likely to continue through at least the first year of the next administration and new leads will be run down and on-going investigations will continue to be worked hard at least through early 2016.  The question is what the posture will be in opening new investigations in other areas?  Recent indications suggest the pipeline is opening and the threshold has been lowered somewhat in terms of the quantity and quality of evidence that must be established by line attorneys to justify investigative authority.  This has a disproportionate effect on enforcement because when the Antitrust Division is solicitous of new cases outside the Title 15 allegation of first impression, agencies know they have another place to go with marginal cases after a US Attorney’s office declines a case.  This spurs investigations of marginal matters and increases quantity, mix and duration of investigations.  This stimulates investigative activities across the investigative agency platform).  

WASHINGTON — A Georgia real estate investor pleaded guilty today for his role in  conspiracies to rig bids and commit mail fraud at public real estate foreclosure  auctions in Georgia, the Department of Justice announced.

Felony charges were filed on March  25, 2014, in the U.S. District Court for the Northern District of Georgia in Atlanta,  against Mohamed Hanif Omar.  According  to court documents, from at least as early as Sept. 1, 2009, until at least March  7, 2012, Omar conspired  with others not to bid against one another, and instead to designate a winning  bidder to obtain selected properties at public real estate foreclosure auctions  in Gwinnett County, Ga.  Omar was also charged with conspiring to  commit mail fraud by fraudulently acquiring title to selected Gwinnett County  properties sold at public auctions.  Additionally,  he was charged with making and receiving payoffs and diverting money to  co-conspirators that would have gone to mortgage holders and others by holding  second, private auctions open only to members of the conspiracy.  The department said that the selected  properties were then awarded to the conspirators who submitted the highest bids  in the second, private auctions.

“Today’s guilty plea is the fourth in the Antitrust  Division’s ongoing investigation into anticompetitive conduct at public real  estate foreclosure auctions in Georgia,” said Bill Baer, Assistant Attorney  General in charge of the Department of Justice’s Antitrust Division.  “The division remains committed to working  with its law enforcement partners to investigate and prosecute local cartels  that harm distressed homeowners and lenders.”

The  department said that the primary purpose of the conspiracies was to suppress  and restrain competition and to conceal payoffs in order to obtain selected  real estate offered at Gwinnett County public foreclosure auctions at  non-competitive prices.  When real estate  properties are sold at the auctions, the proceeds are used to pay off the  mortgage and other debt attached to the property, with remaining proceeds, if  any, paid to the homeowner.  According to  court documents, the conspirators paid and received money that otherwise would  have gone to pay off the mortgage and other holders of debt secured by the  properties, and, in some cases, the defaulting homeowner.

“Today’s plea should further serve  as an example for those who would consider exploiting the processes in place  regarding public foreclosures,” said J. Britt Johnson, Special Agent in Charge  of the FBI Atlanta Field Office. “The intent of the Sherman Act was to provide  a level and competitive field within commerce and the FBI intends to enforce  these types of violations.”

A violation of the  Sherman Act carries a maximum penalty of 10 years in prison and a $1 million  fine for individuals.  The maximum fine  for a Sherman Act charge may be increased to twice the gain derived from the  crime or twice the loss suffered by the victims of the crime if either amount  is greater than the statutory maximum fine.  A count of conspiracy to commit mail fraud  carries a maximum penalty of 20 years in prison and a fine of $250,000 for  individuals.  The fine may be increased  to twice the gross gain the conspirators derived from the crime or twice the  gross loss caused to the victims of the crime.

The investigation is being conducted by the Antitrust Division’s new Washington Criminal II Section  and the FBI’s Atlanta  Division, with the assistance of the Atlanta Field Office of the Housing and  Urban Development Office of Inspector General and the U.S. Attorney’s Office  for the Northern District of Georgia.  Anyone  with information concerning bid rigging or fraud related to public real estate  foreclosure auctions in Georgia should contact the Antitrust Division at 404-331-7113,  call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.

Today’s charges were brought in  connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an  aggressive, coordinated and proactive effort to investigate and prosecute  financial crimes.  With more than 20  federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it  is the broadest coalition of law enforcement, investigatory and regulatory  agencies ever assembled to combat fraud.  Since its formation, the task force has made  great strides in facilitating increased investigation and prosecution of  financial crimes; enhancing coordination and cooperation among federal, state  and local authorities; addressing discrimination in the lending and financial  markets and conducting outreach to the public, victims, financial institutions  and other organizations.  Over the past  three fiscal years, the Justice Department has filed nearly 10,000 financial  fraud cases against nearly 15,000 defendants, including more than 2,900  mortgage fraud defendants.  For more  information on the task force, please visit www.StopFraud.gov.

GeyerGorey LLP’s Grunes and Stucke in Roll Call: Another ‘Too Big to Fail’ Merger From Comcast’s Playbook

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“Last week, the Senate Judiciary Committee held the first hearing to examine the merger of the nation’s top two cable operators, Comcast and Time Warner Cable. But the merger no longer has the air of inevitability it once did. What happened?

People who are studying this merger do not like what they see for many reasons. Here are three: less innovation, greater market power over high-speed broadband and higher prices and poorer service for consumers. Companies confronted with Comcast’s bargaining power, like Netflix, are speaking out. And, unusually for an antitrust case, the public is taking notice: 52 percent of Americans in a recent Reuters poll believed that this deal would reduce competition and be bad for consumers….”

Another ‘Too Big to Fail’ Merger From Comcast’s Playbook, Roll Call, April 17, 2014

Click on link above….

Bridgestone Corp. Executive Agrees to Plead Guilty for Fixing Prices and Rigging Bids on Auto Parts Installed in U.S. Cars

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A former Bridgestone Corp. executive has agreed to plead guilty and to serve 18 months in a U.S. prison for his role in an international conspiracy to fix prices and rig bids of automotive anti-vibration rubber parts sold in the United States and elsewhere, the Department of Justice announced today.

According to the one-count felony charge filed today in the U.S. District Court for the Northern District of Ohio in Toledo, Yusuke Shimasaki, along with co-conspirators, engaged in a conspiracy to allocate sales of, to rig bids for, and to fix, raise and maintain the prices of automotive anti-vibration rubber parts sold to Toyota Motor Corp., Nissan Motor Co. Ltd., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries, affiliates and suppliers, in the United States and elsewhere.

According to the charge, Shimasaki participated in the anti-vibration rubber conspiracy from at least as early as January 2001 until at least December 2008.  During that time period, he was employed by Bridgestone as a sales manager, an executive vice president at Bridgestone APM Co., in Findlay, Ohio, and as a general sales manager.  According to the plea agreement, in addition to serving time in prison, Shimasaki has also agreed to pay a $20,000 criminal fine and to cooperate in the department’s investigation.  The plea agreement is subject to court approval.

“The charge today once again demonstrates the Antitrust Division’s vigorous commitment to hold individuals accountable for engaging in anticompetitive conduct,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The division’s ongoing investigation has resulted in more than two dozen executives serving prison time for their participation in illegal conspiracies involving auto parts.”

Bridgestone manufactures and sells a variety of automotive parts, including anti-vibration rubber parts, which are comprised primarily of rubber and metal, and are installed in suspension systems and engine mounts as well as other parts of an automobile.  They are installed in automobiles for the purpose of reducing road and engine vibration.  On Feb. 13, 2014, the Department of Justice announced that Bridgestone had agreed to plead guilty and to pay a $425 million criminal fine for its role in the conspiracy.  On April 15, 2014, Yasuo Ryuto, Isao Yoshida, two former executives of Bridgestone Corp., and Yoshiyuki Tanaka, a current executive, were indicted  their roles in a conspiracy to fix prices of automotive anti-vibration rubber parts.

To date, 33 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 26 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.29 billion in fines.

Shimasaki is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at (888) 647–3258, visit  www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at (216) 522-1400.

Tennessee Substance Abuse Treatment Facility Agrees to Resolve False Claims Act Allegations for $9.25 Million

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The Department of Justice announced today that CRC Health Corp. (CRC) has agreed to pay $9.25 million to the federal government and the State of Tennessee to settle allegations that CRC knowingly submitted false claims by providing substandard treatment to adult and adolescent Medicaid patients suffering from alcohol and drug addiction at its facility in Burns, Tenn.  CRC,  based in Cupertino, Calif., is a nationwide provider of substance abuse and mental health treatment services.

“Medicaid patients who enter residential treatment programs for alcohol and drug addiction deserve to have treatment provided by qualified personnel according to the appropriate standard of care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will not tolerate health care providers who prioritize profit margins over the needs of their patients.”

CRC owns and operates a residential substance abuse treatment facility in Burns, Tenn., called New Life Lodge.  The government alleged that, between 2006 and 2012, New Life Lodge billed the Tennessee Medicaid program (TennCare) for substance abuse therapy services that were not provided or were provided by therapists who were not properly licensed by the state of Tennessee.  The government also alleged that New Life Lodge failed to make a licensed psychiatrist available to patients at the facility, as required by the state’s regulations; failed to maintain patient-staffing ratios required by Tennessee Department of Mental Health regulations and billed for Medicaid patients in excess of the state-licensed bed capacity at the facility.  In addition, the government alleged that New Life Lodge double-billed Medicaid for prescription substance abuse medications given to residents at the facility.  New Life Lodge currently is not treating Medicaid patients at its facility.

“Substance abuse of varying levels is rampant here and across the country,” said U.S. Attorney for the Middle District of Tennessee David Rivera.  “Fortunately, when needed, Medicaid or TennCare covers substance abuse treatment and certain mental health assistance.  When those services are required, the government will ensure that the treatment is provided with the highest possible quality of care to those patients.  Anything less is unacceptable.”

“Safeguarding TennCare’s mental and behavioral health support system is a particular focus of this office,” said Tennessee Attorney General Bob Cooper.

The allegations covered by the settlement were raised in a lawsuit filed by Angie Cederoth, who was previously employed in New Life Lodge’s billing department, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for the submission of false claims and to receive a share of any recovery.  Cederoth will receive $1.5 million as her share of the settlement proceeds.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

“Providers of health care services must not place profits above patients,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta.  “This was a vulnerable population of individuals who were seeking treatment for their substance abuse problems.  We will pursue these cases in order to ensure proper treatment is afforded to those seeking treatment.”

The investigation of this matter reflects a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Tennessee, the Federal Bureau of Investigation, the Tennessee Attorney General’s Office, the Tennessee Bureau of Investigation and the Department of Health and Human Services Office of Inspector General.

“The FBI is committed to investigating allegations of wrongdoing and false claims related to federally funded health care programs,” said A. Todd McCall, Special Agent in Charge of the Memphis Division of the FBI.  “The resolution of this matter is the result of the hard work by the individual investigators and the coordinated effort of all the agencies involved.”

“This resolution is indicative of a great collaborative effort to combat egregious and fraudulent activity against health care, which ultimately impacts everyone in Tennessee,” said Director of the Tennessee Bureau of Investigation Mark Gwyn.

The lawsuit is captioned U.S. ex rel. Cederoth v. CRC Health Corporation Inc. , CV-3-11-00897 (M.D. Tenn.).   The claims asserted against the defendants are allegations only, and there has been no determination of liability.

Astellas Pharma US Inc. to Pay $7.3 Million to Resolve False Claims Act Allegations Relating to Marketing of Drug Mycamine

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Pharmaceutical company Astellas Pharma US Inc. will pay $7.3 million to resolve allegations that it violated the False Claims Act in connection with its marketing and promotion of the drug Mycamine for pediatric use, the Justice Department announced today.  Astellas Pharma US Inc., located in Northbrook, Ill., manufactures and sells pharmaceutical drugs, including Mycamine.

“The FDA’s drug approval process requires companies to demonstrate the safety and efficacy of their products,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The Justice Department will hold accountable pharmaceutical companies that skirt these rules and seek to bill federal health care programs for uses of drugs that are not reimbursable.”

The settlement resolves allegations that, between 2005 and 2010, Astellas knowingly marketed and promoted the sale of Mycamine for pediatric use, which was not a medically accepted indication and, therefore, not covered by federal health care programs.  During this time period, the FDA approved Mycamine to treat adult patients suffering from serious and invasive infections caused by the fungus Candida, including infections in the esophagus, the blood and the abdomen, and to prevent Candida infections in adults undergoing stem cell transplants.  From 2005 through June 2013, however, Mycamine was not approved to treat pediatric patients for any use.

As a result of today’s $7.3 million settlement, the federal government will receive $4.2 million, and state Medicaid programs will receive $3.1 million.

“The settlement in this case further demonstrates our commitment to hold responsible any pharmaceutical company that disregards the FDA drug approval process and promotes drugs for uses before they have been deemed safe and effective,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.  “It’s a message that should resonate with all drug companies: there are consequences for violating the False Claims Act and putting profit ahead of government safeguards.”

The allegations resolved by the settlement arose from a lawsuit filed by Frank Smith, a former Astellas sales representative, under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the government and to share in any recovery.  Smith will receive $708,852.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19.1 billion through False Claims Act cases, with more than $13.6 billion of that amount recovered in cases involving fraud against federal health care programs.

This case was a cooperative effort among the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the Civil Division of the Department of Justice and the Offices of the Inspectors General of the Department of Health and Human Services and Office of Personnel Management.  The lawsuit is captioned United States ex rel. Smith v. Astellas Pharma, US Inc. et al., No. 10-999 (E.D. Pa.).

 

The claims resolved by the settlement are allegations only; there has been no determination of liability.

Three Bridgestone Corp. Executives Indicted for Roles in Fixing Prices and Rigging Bids on Auto Parts Installed in U.S. Cars

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A Cleveland federal grand jury returned an indictment against one current executive and two former executives of Bridgestone Corp. for their roles in an international conspiracy to fix prices of automotive anti-vibration rubber parts sold in the United States and elsewhere, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Northern District of Ohio in Toledo, charges Yoshiyuki Tanaka, Yasuo Ryuto and Isao Yoshida, all Japanese nationals, with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate sales of, to rig bids for, and to fix, raise and maintain the prices of anti-vibration rubber parts sold to Toyota Motor Corp., Nissan Motor Corp., Suzuki Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries, affiliates and suppliers, in the United States and elsewhere.

“Today’s indictment again demonstrates that antitrust violations are not just corporate offenses but also crimes by individuals,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.    “The division will continue to vigorously prosecute executives who circumvent the law in order to maximize profits by harming consumers.”

Tanaka was employed by Bridgestone in various positions involving anti-vibration rubber parts sales, including manager at Bridgestone and executive vice-president at Bridgestone’s U.S. subsidiary Bridgestone APM Co., from approximately 1991 through at least February 2011.    He is currently manager of the anti-vibration rubber original equipment international planning section.    Ryuto was employed by Bridgestone in various positions involving anti-vibration rubber parts sales, including general manager and director, from approximately 1991 through at least June 2008; he is no longer employed by the company.    Yoshida was employed by Bridgestone in various positions involving anti-vibration rubber parts sales, including manager and general manager, from approximately 1997 through at least September 2008 ; he is no longer employed by the company.

The indictment alleges that Tanaka, Ryuto, Yoshida and their co-conspirators conducted meetings and communications in Japan to reach collusive agreements regarding the sale of automotive anti-vibration rubber products to automakers in the United States and elsewhere.    The indictment alleges that the conspiracy involved agreements affecting the Tacoma, Camry, Tundra, Sequoia, Corolla, Sienna, Venza and Highlander.    According to the indictment, Tanaka participated in the conspiracy from at least as early as January 2004 until at least June 2008; Ryuto participated in the conspiracy from at least as early as April 2001 until at least May 29, 2008; and Yoshida participated in the conspiracy from at least as early as January 2001 until at least July 2008.

Bridgestone manufactures and sells a variety of automotive parts, including anti-vibration rubber parts, which are comprised primarily of rubber and metal, and are installed in suspension systems and engine mounts as well as other parts of an automobile.    They are installed in automobiles for the purpose of reducing road and engine vibration.    On Feb. 13, 2014, Bridgestone agreed to plead guilty and to pay a $425 million criminal fine for its role in the conspiracy.

To date, 32 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry.    Additionally, 26 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.29 billion in fines.

Each of the individuals is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.    The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.    These cases were brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio.    Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit  www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at 216-522-1400.

USAO-NDGA files piracy case with CCIPS and OIA

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(Editor Note: Very interesting and creatively worked piracy case filed by unusual bedfellows: CCIPS, OIA and USAO-NDGA. We will be monitoring subsequent enforcement activity to determine whether this is a one off or if it is a developing trend.) 

Conspirators in Two Android Mobile Device App Piracy Groups Plead Guilty
Members of two different piracy groups engaged in the illegal distribution of copies of copyrighted Android mobile device applications have pleaded guilty for their roles in separate schemes, each designed to distribute more than one million copies of copyrighted apps.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.Thomas Pace, 38, of Oregon City, Ore., pleaded guilty today to one count of conspiracy to commit criminal copyright infringement and is scheduled for sentencing on July 9, 2104.  According to the information filed on Jan. 24, 2014, Pace and his fellow conspirators identified themselves as the Appbucket Group, and from August 2010 to August 2012, they conspired with other members of the Appbucket Group to reproduce and distribute more than one million copies of copyrighted Android mobile device apps, with a total retail value of over $700,000, through the Appbucket alternative online market without permission from the copyright owners of the apps.  Two other defendants charged in the information – Thomas Dye and Appbucket Group leader Nicholas Narbone – pleaded guilty to the same charge in the information on March 10 and March 24, 2014, respectively.Kody Jon Peterson, 22, of Clermont, Fla., pleaded guilty on April 14, 2014, to one count of conspiracy to commit criminal copyright infringement.  According to the information filed on Jan. 23, 2014, Peterson and his fellow conspirators identified themselves as the SnappzMarket Group, and from May 2011 until August 2012, Peterson conspired with other members of the SnappzMarket Group to reproduce and distribute over one million copies of copyrighted Android mobile device apps, with a total retail value of over $1.7 million, through the SnappzMarket alternative online market without permission from the software developers and other copyright owners of the apps.   A sentencing date has not yet been scheduled.The investigation was conducted by the FBI.  The prosecution is being handled by Assistant Deputy Chief for Litigation John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney  of the Northern District of Georgia.  Significant assistance was provided by the CCIPS Cybercrime Lab and the Criminal Division’s Office of International Affairs.

Antitrust and White-Collar Defense Luminary, Robert E. Connolly, Joins GeyerGorey LLP

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Robert E. ConnollyGeyerGorey LLP announced today that Robert E. Connolly has joined the firm’s Washington, D.C. office as a partner.  Connolly spent most of his career as a prosecutor with the Middle Atlantic Field Office of the Antitrust Division, Department of Justice.   Connolly joined that office in 1980 and was Chief from 1994 until early 2013.  More recently, Robert E. Connolly has been with DLA Piper in Philadelphia.  Connolly will lead GeyerGorey’s corporate internal investigations practice.  Founding partner Brad Geyer said “Bob is a natural fit for our culture, which requires constant disciplined teamwork and focus on client solutions that spring from the firm’s’ deep prosecutorial experience”
Connolly said: “I am excited to join my former DOJ colleagues.  Collectively we have worked on many of the Division’s most significant criminal and civil matters.  We have unique insights and experience to offer clients. The firm’s unique approach and rapid growth further strengthens our ability to serve clients faced with government investigations.”
“We expect Bob will be involved in much of the firm’s current portfolio of work, in addition to leading the corporate internal investigation practice,” said founding partner Hays Gorey.  “Bob has a notable reputation for his representation in high-stakes matters. He will strengthen our ability to represent multinational clients in complex litigation, as well as in high-profile regulatory and enforcement agency investigations.”  Connolly will be also be part of GeyerGorey’s compliance team, which blends its experience in enforcement, in-house counseling, criminal and civil defense, and qui tam litigation, to help companies efficiently identify, address, and mitigate litigation risks from the onset and develop an organizational culture that encourages ethical conduct and a commitment to comply with the law.
In his career with the Division, Connolly led major national and international white-collar crime investigations in the areas of antitrust, fraud and obstruction of justice.  He is known for innovative investigative and trial strategy and a command presence in the courtroom.  He left the government with one of the, if not the most successful, trial records in Antitrust Division history. Connolly was known for his building and leading effective teams that had an extraordinary commitment to successfully completing the mission.
Notably, Connolly led the international graphite electrodes cartel grand jury investigation, which resulted in seven corporate and three individual convictions and approximately $437 million in fines, including what was then the largest post-trial criminal fine in Antitrust Division history.  The investigation was capped by charging, trying and convicting a foreign corporation of aiding and abetting the cartel.   Connolly, as lead trial attorney, along with GeyerGorey’s Wendy Norman, received the DOJ’s highest litigation honor, the John Marshall Award for Outstanding Legal Achievement for Trial Litigation.  More recently, Connolly’s office led the historic effort to extradite Ian Norris to the United States from Britain to stand trial on obstruction of justice charges, of which Norris was later convicted.
In addition to his prosecutorial experience, Connolly was the Victor Kramer Fellow at Yale University in 1989-1990. He has served as an adjunct professor of antitrust law at Rutgers-Camden Law School and later Drexel School of Law.   He currently serves on the Advisory Board for the ABA Cartel and Criminal Practice committee and since leaving the Antitrust Division in 2013, has authored more than a dozen articles on U.S. and international competition law practice.

Government Settles False Claims Act Allegations Against Kansas Cancer Treatment Facility and Its Owner

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Hope Cancer Institute, a cancer treatment facility in Kansas, and Dr. Raj Sadasivan, the owner of Hope Cancer Institute, have agreed to pay $2.9 million to resolve allegations that they violated the False Claims Act by submitting claims to Medicare, Medicaid and the Federal Employee Health Benefits Program for drugs and services that were not provided to beneficiaries, the Department of Justice announced today.

“Billing Medicare and Medicaid for drugs that are not provided to beneficiaries contributes to the soaring costs of health care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.   “Providers will be investigated aggressively and held accountable for falsely billing federal health care programs.”

The settlement resolves allegations that, between 2007 and 2011, Sadasivan and Hope Cancer Institute submitted claims to federal health benefit programs for the chemotherapy drugs Rituxan, Avastin and Taxotere that were not provided to federal health care beneficiaries.   Sadasivan allegedly instructed the employees of Hope Cancer Institute to bill for a predetermined amount of cancer drugs at certain dosage levels, when lower dosages of these drugs were actually provided to beneficiaries.   As a result of these instructions, Hope Cancer Institute submitted inflated claims to federal health care programs for drugs that were not actually provided to patients.

“Health care providers that try to make a quick buck by billing taxpayers for services never provided will instead pay a high price for their greed-fueled fraud,” said Gerald T. Roy, Special Agent in Charge, U.S. Department of Health and Human Services Office of Inspector General.   “We are dedicated to investigating and prosecuting these types of deceptive schemes.”

The settlement resolves a lawsuit filed by Krisha Turner, Crystal Dercher and Amanda Reynolds, former employees of Hope Cancer Institute, under the qui tam, or whistleblower,provisions of the False Claims Act, which allow private citizens with knowledge of false claims to file suit on behalf of the government and to share in any recovery.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.   The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.   Since January 2009, the Justice Department has recovered a total of more than $19.1 billion through False Claims Act cases, with more than $13.6 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with Sadasivan and Hope Cancer Institute was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Kansas and the U.S. Department of Health and Human Services Office of Inspector General.   The False Claims Act suit was filed in the U.S. District Court for the District of Kansas and is captioned United States ex rel. Turner et al. v. Hope Cancer Institute, et al.

The claims settled by this agreement are allegations only; there has been no determination of liability.